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The Weekly Rap! Friday Nov 9, 2012

The Dow is currently trading at 12,857 lower by 338 pts over last week. The S&P 500 is trading higher at 1,386. Gold is trading at $1,685 an ounce, while oil futures at $85.77 a barrel. Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.65/Gal.

Yields on 10-year notes, which move inversely to prices, are trading at 1.64%. 30-year bond yields are trading at 2.78%. Mortgages or FNMA 3.5% MBS (Mortgage Backed Security) is currently at 106.66 trading a bit higher post-election. Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate.

In economic news this week; The Institute for Supply Management a gauge of non-manufacturing activity declined slightly to 54.2 in October from 55.1 in September. Readings above 50% indicate expansion. Of key components, the new-orders index, a sign of future demand, fell to 54.8 from 57.7. The business activity/production index declined to 55.4 from 59.9. Meanwhile, the employment component rose to 54.9 from 51.1. What does this all mean? Well, basically we’re growing but at a snail’s pace.

The Labor Department reported that Job openings at U.S. workplaces dropped slightly to 3.56 million in September from 3.66 million in August. Compared with last year, job openings have risen a mere 2%. Private job openings increased 3% while government openings fell 8%. Claims for unemployment benefits fell modestly last week, but the data was distorted by Hurricane Sandy.

Consumer sentiment, which covers how consumers view their personal finances as well as business and buying conditions, is at the highest level in more than five years, led by brighter views on current conditions, according to the preliminary reading of the University of Michigan/Thomson Reuters consumer-sentiment index which rose to 84.9 in November, the highest level since July 2007. The gauge, averaged about 87 in the year before the most recent recession.

This rise in sentiment explains why consumers continue to spend more. The Fed reported that consumers increased their debt in September by $11.4 billion, the second straight strong gain. For the third quarter, consumer credit increased at a 4% annual rate. As in the prior month, the increase in September credit came from a jump in non-revolving debt such as auto loans, personal loans and student loans.